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local law. See Zmuda v. Commissioner, 79 T.C. at 720; Vercio v.
Commissioner, 73 T.C. 1246, 1253 (1980).
Petitioner does not dispute that the amounts paid to the
trust were on account of his personal services. Petitioner
simply argues that the trust earned the payments related to his
services and that the trust is bona fide. On the basis of the
record before us, we conclude that petitioner was the true earner
of the amounts paid and that petitioner established the trust as
a mechanism to avoid tax. Consequently, we hold that the trust
should not be respected for Federal income tax purposes and that
the money paid to the trust is taxable income to petitioner.3
Respondent determined that petitioner is liable for
additions to tax under section 6651(a)(1). Section 6651(a)(1)
imposes an addition to tax for failure to file a return on the
date prescribed (determined with regard to any extension of time
for filing), unless the taxpayer can establish that such failure
is due to reasonable cause and not due to willful neglect.
Petitioner did not file any returns for the years in issue or
present evidence indicating that his failure to file was due to
reasonable cause and not due to willful neglect. See Rule
3 Because we rule against petitioner with regard to
respondent’s determinations against him, we accept respondent’s
concession related to the determinations against the trust.
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